Fixerguy's Common Sense

Ignoring the Real Spending Problem

Perhaps the biggest spending problem present in our current budget predicament is the tax policy that has been increasing income and wealth inequality in this country for more than thirty years – beginning with the Reagan Administration. Taxing capital gains and dividend income at rates lower than that for other forms of income for most taxpayers has disproportionately benefitted the wealthy throughout this time period, especially as wages and salaries have stagnated for the vast majority of Americans.

The main justification for this disparate treatment of capital gains and dividend income vs. traditional wage/salary income has been that it encourages capital accumulation to start and expand businesses, creating jobs and growing the economy as a whole. What has happened has not shown that this is how the accumulated funds have been spent at all. Many good paying manufacturing jobs have been relocated to countries with weaker labor laws earning lower…